Self reliance

Business expansions dominated the landscape of a stable economy

With four of the top five farm counties in the state, the Shenandoah Valley is accustomed to growing its own. Here, poultry houses echo with the clucking of chickens. Cattle and sheep graze on the hillsides. The limestone-rich soil nourishes fields of corn, grains, soybeans and other commodities. Fresh peaches and apples fill area orchards during harvest, and grapes produce award-winning wines.

Self-reliance has long governed economic development in the region as well, and 2012 was no exception. Business expansions dominated the landscape, strengthening an already stable economy that tends to be one of the last areas of the commonwealth to feel the pinch from an economic downturn and the first to come out of it.

“Most of our growth is in existing industry. We’re building a business model around that,” says Robin Sullenberger, chief executive of the Shenandoah Valley Partnership, a regional economic development coalition that includes the counties of Augusta, Bath, Highland, Page, Rockbridge, Rockingham and Shenandoah plus the cities of Buena Vista, Harrisonburg, Lexington, Staunton and Waynesboro.

According to data provided by the partnership, of the $51.2 million in corporate investment in 2012, $48.3 million came from expansions, in industries as diverse as food and beverage production, propane, industrial refrigeration, automotive exhaust systems and bioplastics. “It’s very clear that the business world looks at the valley as a good place to do business,” Sullenberger says.

McKee Foods in Augusta County was one of the region’s heavy hitters in 2012, completing a $19 million expansion of its snack-cake business that added 78 jobs. “They’re a national-international company with very high productivity,” Sullenberger says. “They’ve shown consistent growth and are now one of our top-tier companies and highly regarded by the state.”

Staunton-based Cadence Inc., makers of medical instruments, received a 2012 Hire Power Award from Inc. magazine as one of the top 10 manufacturers in the country for job creation last year. The company was recognized for adding 79 positions in the last three years for a total of 335 employees as of December. Cadence was one of only two health-care manufacturers who made the magazine’s list, the other being California-based Applied Medical.

“We have a great team of employees who are committed to our mission to improve patient outcomes,” says Ca­­dence President Alan Connor. “These employees enable Cadence to open the door for more employees to help us continue our mission.”

Winchester-Frederick
The expansion trend also was evident in Winchester-Frederick County, which had a banner year in 2012 with more than $180 million in private investment and 800 new jobs, with the vast majority of the activity coming from existing businesses. In fact, capital investment at the top of Virginia reached its highest level in 10 years, and the Winchester economy eclipsed all Virginia metropolitan statistical areas in investment per capita ($1,719).

Carmeuse Lime & Stone, which has a mining operation in Frederick County, announced in June that it will invest $45 million to ramp up its production of lime due to federal regulations that require coal-fired utilities to have additional “scrubbing” to prevent pollution. Jim Bottom, the company’s area operations manager, says it received an attractive incentive package from Frederick County during its site selection process, “which certainly influenced our decision to expand in Virginia versus other states.”

In August, Fairfax County-based Navy Federal Credit Union, the world’s largest credit union, announced it will construct an additional facility on its Winchester campus, adding 400 positions — mostly member service representatives — that pay above the region’s average wage. The company currently employs about 500 people locally. The expansion is slated for completion this summer.

Also in August, British manufacturer M&H Plastics, which makes custom packaging for the personal care and health-care markets, said it will invest $6.2 million to expand its local facility by 50,000 square feet, creating 20 jobs. The Frederick County facility, the company’s first manufacturing location in the United States, has been open since 2005. A $2 million expansion was completed in 2009. “The Frederick County community is a great fit for M&H Plastics because of its skilled and committed work force,” says CEO Kurt Nyberg. “In addition, the area’s location affords M&H the logistical infrastructure needed to quickly and efficiently access our expanding customer base and suppliers in the U.S. market.”

The Winchester-area econ­­­­­omy finished the year with news that Kraft Foods, a corporate partner since 1991, will invest $25 million to increase production of its Capri Sun beverages. The project will create 25 jobs.
“It was a great year from a raw numbers standpoint, but even more so when you consider the diversity of the activity,” says Patrick Barker, executive director of the Winchester-Frederick County Economic Development Commission. “We keep adding new legs to the stool to keep us stable.”

‘A mixed blessing’
Because of such stability, the valley receives relatively little funding from the state for economic incentives — the lowest per capita of any region in the commonwealth. “Our success can at times be a mixed blessing,” Sullenberger says. “Because we look so good on paper, there’s a perception that we don’t need assistance.”

Rather than rely on funds from Richmond, the valley has learned to harness its resources.

“Our local governments are tremendously collaborative,” Sullenberger says of the Shenandoah Valley Partnership’s member jurisdictions. “We have the benefit of having quality colleges and universities in our backyard. Our local work-force investment board is very active, especially in the areas of energy, manufacturing and health care.”

High-tech manufacturing is a growing sector, Sullenberger says, thanks in part to the new Advanced Technology Center at Blue Ridge Community College, and the region is well positioned to handle logistics with Interstate 81 running the length of the valley, and the Virginia Inland Port in Front Royal.

“Our proximity to Washington D.C., is important as it applies to technology and defense contracting,” Sullenberger adds. “And the biosciences sector got a boost with the arrival of [drug researcher] SRI International [in Harrisonburg].”

The valley also supports entrepreneurship with the help of a variety of partners, including colleges and universities, small business development centers and local jurisdictions, some of whom offer seed money.

Inside-out approach
Sullenberger says the central valley’s inside-out approach to economic development is benefiting from the Virginia Economic Development Partnership’s focus on helping Virginia businesses expand their operations. The VEDP, in conjunction with local economic development offices, assists companies with site selection and market research as well as coordinating with government agencies on issues such as work-force training and environmental regulations. A variety of performance-based incentives are also available to expanding businesses, including tax credits and tax exemptions.

Outside inquiries from companies looking to locate in the region typically funnel through the Shenandoah Valley Partnership and the Winchester-Frederick County EDC.

“Naturally we like to highlight the quality of life here in the valley, the diversity of industry,” Sullenberger says. “Generally, once a company shows interest in a particular site, that’s when the local jurisdictions get involved.”
Despite its best efforts, the valley does lose prospects. The region was a finalist last year in the sweepstakes to lure the craft-brewing company Sierra Nevada. The company ended up choosing a site near Asheville, N.C., which has become a hub for microbreweries in the U.S.

“I think in that case they wanted to be in a specific area,” Sullenberger says. “But we had a strong pitch. It shows that our local jurisdictions do understand what it takes to be competitive.”